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Simple NPV and ROI Calculation

Case: A company invests $15000 and receives a $11000 cash benefit at the end of the first year and a $12100 cash benefit at the end of the second year. (Assume Cost of Money = 10%)

Calculation:
t=0t=1t=2
Costs
Onetime investment(15000)
Benefits
Cash1100012100
F(15000)1100012100
P(15000)1000010000
NPV20000 – 15000 = 5000
ROI5000/15000 = 33.33%



NPV = Σ P = 10000 + 10000 – 15000 = 5000
ROI = NPV/Initial investment = 5000/15000 = 33.33%